SHEL Should I Buy
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Shell PLC is not a strong buy for a beginner investor with a long-term strategy at this time. While the company has shown some positive financial growth in net income and EPS, the stock faces significant headwinds, including declining reserve life, hedge fund selling, and mixed analyst sentiment. The technical indicators suggest a neutral to slightly bullish trend, but the lack of strong proprietary trading signals and the potential for a short-term decline in stock price make it prudent to hold off on buying now.
The MACD is positive at 0.291, indicating a bullish trend, and moving averages (SMA_5 > SMA_20 > SMA_200) are also bullish. However, RSI is neutral at 56.071, and the stock is trading near its resistance level (R1: 79.56). The stock has an 80% chance of declining in the short term, which adds caution.
The company has also increased its gross margin and maintained a strong buyback pace. Additionally, the CEO's confidence in meeting 2030 targets without acquisitions is a positive signal.
Hedge funds have significantly increased selling activity, and analysts have expressed concerns about Shell's reserve life and portfolio challenges. Downgrades and reduced price targets from multiple firms indicate skepticism about the company's near-term performance. The stock also has a high probability of short-term declines based on candlestick pattern analysis.
In Q4 2025, revenue declined by -3.30% YoY, but net income increased by 345.58% YoY, and EPS rose by 407.14% YoY. Gross margin also improved to 16.25%, up 5.86% YoY. While profitability metrics are strong, the revenue decline raises concerns about growth sustainability.
Analyst sentiment is mixed, with recent downgrades and reduced price targets from Wells Fargo, RBC Capital, and UBS. Piper Sandler and Jefferies maintain positive ratings but have also lowered price targets. Concerns include reserve life, portfolio challenges, and balance sheet expansion for buybacks.
